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The path to net-zero: Canada’s clean hydrogen timeline and related risks

Natural Resources Canada engaged with stakeholder groups, provincial and territorial governments, and Indigenous partners to develop a hydrogen strategy to enable Canada to meet its net-zero climate change goals by 2050, diversify its energy mix, and generate national and cross-border economic benefits.

09/16/2022 · 4 minute read

Natural Resources Canada engaged with stakeholder groups, provincial and territorial governments, and Indigenous partners to develop a hydrogen strategy to enable Canada to meet its net-zero climate change goals by 2050, diversify its energy mix, and generate national and cross-border economic benefits. 

We outline the near-, mid-, and long-term initiatives that are part of this strategy, actions that have been taken to date at various government levels, and some of the risks associated with hydrogen production. 

Near-term: Laying the foundation (2020-2025)

The focus during this initial five-year period is on laying the foundation for Canada’s hydrogen economy. This includes: 

  • Developing new hydrogen supply and distribution infrastructure to support early deployment HUBs.

  • Driving investment through regulations such as the Clean Fuel Standard.

  • Introducing new policy and regulatory measures to advance the net-zero emissions agenda. 

  • Investing early in innovation to achieve medium- and long-term goals. 

Mid-term: Growth and diversification (2025-2030)

During this five-year period, growth and diversification activities will include: 

  • Growing early deployment HUBs and initiating new ones, all connected by corridor infrastructure. 

  • Focusing on hydrogen use applications that provide the best value proposition relative to other zero-emission technologies, for example, fuel cell electric vehicles and transit buses. 

  • Production of hydrogen on a larger scale to allow for hydrogen/natural gas blending for industry, the built environment, and as a feedstock for chemical production and hydrocarbon upgrading to be commercialized in regional HUBs. 

  • Deploying hydrogen in mining operations as a result of implementation of a regulatory framework and market-ready technologies.

  • Exploring through pilots hydrogen as a utility-scale energy storage medium.

Long-Term: Rapid Market Expansion (2030-2050)  

At this stage, Canada should start to realize the full benefits of a hydrogen economy with deployments increasing and new commercial applications growing, all of which would be supported by a foundational backbone supply and distribution infrastructure. This will result in: 

  • Advances in battery technology and differentiation leading to higher power demand applications (utility biased) being predisposed toward hydrogen energy storage and lower power demand applications (efficiency biased) using batteries for energy storage. 

  • Dedicated hydrogen pipelines becoming an attractive alternative as the percent of hydrogen in NG systems increases. 

  • Heavy emitting industries adapting their operations — including ammonia and nitrogen fertilizers, and low carbon steel — as low carbon intense hydrogen is more widely available.

So where are we today?

Hydrogen blending projects, which consist of injecting hydrogen into delivered natural gas to reduce the carbon footprint, are already underway.

Smaller hydrogen hubs are being developed in combination with and in order to serve hydrogen fleets.

Larger hubs, like the Edmonton Region Hydrogen HUB, have been announced in line with Canada’s net-zero goals.   

A number of large-scale blue hydrogen production facilities also have been announced and are in development, as are large-scale carbon capture and sequestration projects.

In short, the Canadian hydrogen economy is well on its way and appears to be generally tracking with National Resource Canada’s strategy.

Key risks  

Hydrogen offers many possibilities — it can be used to decarbonize industrial processes, heat buildings, and fuel cars, airplanes, and trains — but its increased production is expected to bring new risks, some of which are considered below.

  1. Fires and explosions 
    Gaseous hydrogen can be compressed into long cylinders that are stacked on trailers for transport and can be stored in liquid form in storage tanks. Ruptures of tube trailers or tanks can cause fire or explosions. Hydrogen burns in the air with an invisible flame. Hydrogen detection sensors and emergency shutdown systems can be used to manage explosion and fire risks
  2. Leakage 
    Given the small size of the hydrogen molecule, it cannot be transported using Canada’s existing pipelines without the risk of leakage. Leaks are expensive, while a build-up of hydrogen in a poorly ventilated or enclosed space could result in an explosion. The present infrastructure could potentially be modified at a relatively low cost to carry up to a 20% hydrogen natural gas blend. And while building dedicated hydrogen lines is a potential solution given the large geographic footprint of Canada, the population is not particularly concentrated so it may be difficult and uneconomical to build pipelines.
  3. Technological risk 
    Many hydrogen projects are small-scale with limited volumes of manufacturing capacity. Applications still need to be proven at scale before they can be widely deployed.
  4. Metal and steel embrittlement 
    High-strength steels and metals in contact with hydrogen can become brittle, which could lead to equipment failure.
  5. Transportation and storage risks 
    Such activities are particularly difficult due to the characteristics of hydrogen. As already noted, in addition to being flammable and easily dispersed into the air (prone to leaks), hydrogen has a low density. These characteristics, combined with a lack of existing dedicated infrastructure, make transportation expensive and risky.
  6. Business interruption risks 
    Loss or damage of an electrolyzer could halt hydrogen production. Given potentially long wait times for equipment — which could reach several years in the near future — business interruption exposure may be significant.

Safe processes and risk management are going to be vital going forward to reduce the frequency and severity of hydrogen-related accidents and to maintain reliable hydrogen supplies. Insurers are likely to be at the forefront of the conversation as the hydrogen transition gets underway.

If you have any questions about the growing hydrogen economy in Canada and related risks, please contact your Marsh advisor. 

Meet the authors

Placeholder Image

Andrew Herring

CEO, Energy and Power, Marsh Specialty

  • United Kingdom

Mark Heneghan

Mark Heneghan

Global Hydrogen Practice Leader

  • United Kingdom

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Brad Vescarelli

National Energy Industry Leader

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